International Trade committee  Plans in engineering are under way, but until we have clarity on policy and price, I think we're unlikely to see large volumes of capital being deployed. In the United States, with the Inflation Reduction Act, the section 45Q tax credit was substantially upgraded, so for the production of hydrogen, electricity, ammonia and ethanol—a variety of the building blocks of reality and of society—the United States has chosen to pay for the carbon capture and sequestration process.

International Trade committee  Thank you, Chair. It is an honour to be invited to present on these critically important issues. We're hear to discuss the Inflation Reduction Act generally, and I will speak more specifically to the deployment of carbon capture and storage and how that relates to the United States and Canada.

International Trade committee  I'm still unable to hear the chair speaking.

Environment committee  I think my observation on the United States is that at the state level and the federal level, there's an acknowledgement of the importance of things like liquid natural gas and significant manufacturing capabilities that require energy-intensive steel production and petrochemical production.

Environment committee  The United States is a massive market. That's one advantage that Canada just won't ever be able to replicate, but one item that I'm suggesting is clear certainty on carbon value and having a contractual approach so that if a future government elects to change the carbon price, it is underwritten contractually and bank loans and large-scale equity investments can be made in projects that are based on these carbon prices.

Environment committee  The reports from a variety of research groups often show carbon capture representing between 10% and 20% as an emissions solution across all emissions. In terms of scale, carbon capture is a massive component. This category also includes things like direct-air capture, which would be pulling CO2 out of the atmosphere with industrial processes.

Environment committee  I think there's no way for Canada to meet any of its climate goals without large-scale deployment of carbon capture, because we need the energy production—

Environment committee  Broadly, carbon capture is applicable to things like fertilizer production, for example, cement production and electricity production. These are materials that need to be made for the economy. Carbon capture assists in reducing emissions from the production of these items. In the United States, 45Q provides 12 years of certainty as to the total volume of dollars that are to be earned for each tonne of CO2 that's captured and sequestered into the ground.

Environment committee  Thanks for the question. Broadly speaking, the Inflation Reduction Act for carbon capture addresses two major areas. The first is a significant increase in the value. For geologic storage, the 45Q tax credit will be $85 U.S. per tonne and $60 per tonne for enhanced oil recovery.

Environment committee  It's an important difference. The increase in the value is significant. The other significant piece is they simplified how that credit is turned into money. In previous versions of 45Q, monetizing the tax credit required a complex tax structure called tax equity finance. What they've introduced now is a direct pay mechanism.

Environment committee  The United States is far and away superior with this change, compared to Canada. We are electing to solve this problem slightly differently by relying on a combination of the investment tax credit and the federal carbon price. Part of what I'm here to discuss is the importance of the Government of Canada providing contractual certainty on the schedule of the carbon price, so that people who are developing carbon capture and storage projects, which can be billion-dollar projects, are able to underwrite the scheduled carbon price.

Environment committee  Thank you, Chair. It's an honour to once again be invited to present. I'm here to comment on the financial realities of deploying carbon capture and storage technologies in Canada. Deployment at scale requires certainty on the value of carbon. I'd like to make three points. First, the combined Canadian investment tax credit and carbon price framework need to be competitive with the section 45Q tax credit in the United States.

Environment committee  The price of carbon emissions does need to go up for carbon capture and storage to make sense. It probably needs to be somewhere in the order of $100 a tonne because of the costs of doing carbon capture. For the industries, for example, the power industry in Alberta, the consumer in Alberta will end up paying for the carbon capture and storage because the cost of electricity will be higher, and the extent to which the price of electricity is higher is partially related to the investment tax credit.

Environment committee  I spent a year living in California, and I was able to attend a variety of seminars and conferences at Stanford on carbon capture and storage, and there are two observations I made while being there. One was that the capital market, the financial system, has to be the funders of climate solutions generally, so the project finance principles, the fiduciary duty principles of investors, are well known in law.

Environment committee  As a starting position, a price on carbon is absolutely essential. Valuing carbon is the starting point for all the discussions, so that fossil fuels, renewables, cement, steel, power, and fertilizer...We all compete to solve the emissions problems by knowing precisely what the value is for avoiding that carbon emission.